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Velji Deoraj and Co. Vs. Commissioner of Income-tax Bombay City Ii - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 71 of 1962
Judge
Reported in[1968]68ITR708(Bom)
ActsAppellate Tribunal Rules, 1946 - Rule 29
AppellantVelji Deoraj and Co.
RespondentCommissioner of Income-tax Bombay City Ii
Appellant AdvocateS.P. Mehta, Adv.
Respondent AdvocateG.N. Joshi, Adv.
Excerpt:
direct taxation - exercise of discretion - rule 29 of appellate tribunal rules, 1946 - admission of additional evidence in appeal before tribunal - admission dependent upon tribunal requiring it for purpose of pronouncing judgment or curing inherent lacuna - tribunal found no difficulty in pronouncing judgment on material or record - no inherent lacuna discovered - held, tribunal rightly disallowed additional evidence. - - he was not, however, satisfied with regard to the credit entires in favour of maneklal bhanji in the account for the s. the income-tax officer further pointed out to the assessee that, since no repayment out of this amount had been made to maneklal bhanji during the six years and no interest had been credited to the account for all these years, it may as well be.....v.s. desai, j.1. the following two question, which arise out of the tribunal's order relating to the reassessment of the assessee under section 34 of the indian income-tax act in respect of the assessment year 1950-51, have been referred to this court by the tribunal on a requisition under section 66(2) of the indian income-tax act : '(1) whether, on the facts and under the circumstances of the case, the discretion of the tribunal was judicially exercised in refusing to admit the important evidence in the form of the bank certificate produced by the assessee in respect of this case, that the money had been received by the assessee from aden in approved manner and (2) whether there is any evidence on the record to justify the finding of the tribunal to the effect that the sum of rs......
Judgment:

V.S. Desai, J.

1. The following two question, which arise out of the Tribunal's order relating to the reassessment of the assessee under section 34 of the Indian Income-tax Act in respect of the assessment year 1950-51, have been referred to this court by the Tribunal on a requisition under section 66(2) of the Indian Income-tax Act :

'(1) Whether, on the facts and under the circumstances of the case, the discretion of the Tribunal was judicially exercised in refusing to admit the important evidence in the form of the bank certificate produced by the assessee in respect of this case, that the money had been received by the assessee from Aden in approved manner and

(2) Whether there is any evidence on the record to justify the finding of the Tribunal to the effect that the sum of Rs. 95,483 (Rupees ninety-five thousand for hundred and eighty-three) forming part of the moneys credited in the account of the non-resident, Maneklal Bhanji of Aden, in S. Y. 2005 in the assessee's books of account is the assessee's own money representing his income from an undisclosed source ?'

2. The assessee is a partnership firm consisting of a father and son as partners and is carrying on business as exporters and commission agents. On of the foreign parities to which goods are export by the assessee-firm is a firm called 'Maneklal Bhanji' at Aden. The assessment of the firm for the assessment year 1950-51, for which the relevant previous year was the S. Y. 2005 ending on 21st October, 1949, was originally made by the Income-tax Officer on 14th June, 1951, determining a total income of Rs. 46,836. The assessee-firm, it may be stated, is registered under section 26A of the Indian Income-tax Act. During the assessment proceedings for the assessment year 1955-56, corresponding to the previous year S. Y. 2010, the Income-tax Officer noticed that the account of Maneklal Bhanji of Aden in the account books of the assessee showed an opening credit balance of Rs. 95,483. He also found that no interest had been credit to this account. He, therefore, called upon the assessee furnish statement of account of Maneklal Bhanji during the previous six years. In response thereto, the assessee furnished the statement of the accounts as were required but produced the account books and the invoices, etc., only for the years subsequent to S. Y. 2005 and stated that the account books for the S. Y. 2005 were not available. The Income-tax Officer found that, so far as the accounts for the S. Y. 2006 to 2010 were concerned, they were quite satisfactory. He was not, however, satisfied with regard to the credit entires in favour of Maneklal Bhanji in the account for the S. Y. 2005, for which no account books were produced and had reason to believer that a part of the income of the assessee for the year, as represented by certain credits, had escaped assessment. After obtaining the necessary sanction from the Commissioner of Income-tax, he started reassessment proceedings against the assessee under section 34(1) in respect of the assessment for the assessment year 1950-51. In the course of this assessment proceeding. the assessee was called upon to produce the account books for the S. Y. 2005 and for the subsequent years. The assessee declined to produce the account books for the S. Y. 2005 on the ground that the said account books not traceable. The Income-tax Officer took the view that the explanation of the assessee that the account books were not traceable was not genuine and he was deliberately not producing the account books for the said year. He, therefore, decided to make the assessment under section 23(4) of the Act. By his letter dated 6th August, 1956, he intimated to the assessee his intention to make an assessment under section 23(4) and called upon him to supply the explanation as to why an amount of Rs. 95,483 credited in the account of Maneklal Bhanji of Aden during the course of the assessment year should not be treated as the concealed income of the assessee himself. In the said letter the Income-tax Officer pointed out to the assessee that the statement of account which it has produced, when examined along with the account books for the S. Y. 2006 to 2010, showed that tin the account of Manaklal Bhanji of Aden for the S. Y. 2005 there was a total debit of Rs. 1,90,211 as the price of the goods exported to him. These debits included the value of the goods amounting to RS. 1,26,452, which were shipped at the end of the accounting year and for which the price was received from Maneklal Bhanji during the subsequent S. Y. 2006. For the remaining goods shipped during the year which were valued at Rs. 63,759 payments were received from Maneklal Bhanji during the court of the year. It was, however, shown in this account that the total credits in favour of Maneklal Bhanji during the S. Y. 2005 were Rs. 1,59,242. The total of credits in favour of Maneklal Bhanji, therefore, exceeded the price of the goods received by him during the course of the year an amount of Rs. 95,483. It was pointed out to the assessee that at the time when these credits were made in favour of Maneklal Bhanji, there were exchange restrictions between India and Aden and it was not normally possible for the Aden party to remit monies to India except to the extent of the value of the goods exported to him. It was, therefore, likely that the excess of credits over the price of the goods exported to Maneklal Bhanji represented the deposit of the secret profits of the assessee in the account of the non-resident. The Income-tax Officer further pointed out to the assessee that, since no repayment out of this amount had been made to Maneklal Bhanji during the six years and no interest had been credited to the account for all these years, it may as well be that Maneklal Bhanji may be unaware of this excess credit in his account and it is also likely that to the extent to which this excess amount is credited in the said account, it is a benami account of the assessee. In conclusion, the Income-tax Officer called upon the assessee to submit his explanation, if any, with regard to the said credits of Rs. 95,483. In reply to this letter the assessee wrote to the said credits of Rs. 95,483. In reply to this letter the assessee wrote to the Income-tax Officer on 11th August, 1956, submitting its explanation for the queries made by him. As to the Income-tax Officer's complaint that the account books for the S. Y. 2005 were being suppressed, it was stated that the said inference was incorrect and the truth of the matter was that the account books had not been traced by the assessee. It was pointed out in that connection that there was no reason for the assessee to suppress the account books and that the same had been produced before the Income-tax Officer on the earlier occasion when they were available. The assessee further stated that the amounts of credits totaling to Rs. 95,483 appearing in the account of Maneklal Bhanji in the S. Y. 2005 really belonged to the said party; that all those amounts had been received after the 1st of September, 1947, and could, therefore, have been received by it only in a manner approved under the Foreign Exchange Regulations. Since part of the price of the goods supplied to the party during the course of the year was remitted during the subsequent year, the amounts sent by Maneklal Bhanji during the S. Y. 2005 may have had a reference to certain dealings made prior to S. Y. 2005. As to the Income-tax Officer's suspicion that the Aden party may not be aware of its credits in its accounts, the assessee produced along with its reply a letter and an affidavit from the Aden party. As to the fact that no prepayments had been made out of that account and the fact that no interest was charged on the amounts the assessee relied that the repayments could not be made because of the exchange regulations and as to interest not being charged, it was because no interest was claimed by the assessee from the Aden party when there was a debit balance in the account of the Aden party and, therefore, no interest was credited for the excess credit in his favour. The Income-tax Officer was not satisfied with the explanation submitted by the assessee and did not accept the assessee's case that the amount belonged to the foreign party. According to him, having regard to the exchange regulations, it was not likely that the Reserve Bank would allowed remittances in excess of the of the value of the goods shipped as mentioned in the invoices. The assessee no doubt has stated that these were remittances made in an approved manner, but it has not substantiated it by producing any proof. As to the explanation given by the assessee that remittances may have reference to payments for goods of earlier years, the Income-tax Officer had held that the said explanation was absolutely untrue as at the beginning of S. Y. 2005 there was an opening credit balance in favour of the Aden party. Moreover, he was pointed out that the assessee in its explanation had submitted that some of the remittances may have some connection with goods supplied during the earlier years, at another stage it stated that these payments were in respect of advance payments, which had remained to be repaid because of the exchange regulations and restriction. The circumstances that the explanations give by the assessee were in consistent and contradictory indicated, according to the Income-tax Officer, that neither of them was true. In the absence of the foreign party having been produced before him, the Income-tax Officer was prepared to give any importance to the letter or the affidavit of the Aden Party, which were sought to be produced by the assessee. Having regard to the facts and circumstances of the case, the Income-tax Officer held that the assessee had failed to satisfy him that the amount of Rs. 95,483 belonged to the Aden party and in view of the several circumstances discussed by him, he held that the said mount represented the concealed profits of the assessee and, therefore, liable to be included in the income of the assessee-firm. The decision of the Income-tax Officer was confirmed in appeal by the Appellate Assistant Commissioner. In the second appeal before the Tribunal, two contentions were raised by the assessee. One was that the assessment made under section 34(1) of the Indian Income-tax Act was invalid and the other was that inclusion of the amount of Rs. 95,483 in the income of the assessee as income from an undisclosed source was erroneous. The Tribunal negatived both these contentions and agreed with the decision taken by the Income-tax Officer and the Appellate Assistant Commissioner and dismissed the assessee's appeal. During the course of the appeal before the Tribunal the assessee sought to produce a certificate from the Amalgamated Bank of National & Grindlays, certifying that the entire amount of credits has been received from the Aden party through the bank during the S. Y. 2005. The admission of this additional evidence at the appellate stage was objected to by the department and the Tribunal sustained the said objections and refused to admit the same. On the material on record the Tribunal held that the conclusion arrived at by the Income-tax Officer and the Appellate Assistant Commissioner with regard to the said amount of Rs. 95,483 was correct and agreeing with the department it upheld the addition of Rs. 95,483 as the assessee's own money representing its income from an undisclosed source. It further held that the nature of this income from undisclosed source was also business income. The assessee applied under section 66(1) of the Indian Income-tax Act for a reference to this court but the said application was rejected by the Tribunal on the ground that no question of law arose out of its order. The assessee then applied to this court under section 66(2) requesting this court to require the Tribunal to draw up a statement and refers to this court a number of question of law said to be arising out of the Tribunal's order. This court, however, allowed the application only in respect of the two questions, which we have already set out above.

3. Now, the first question is whether the Tribunal was justified in refusing to admit in the appeal before it the additional evidence which was sought to be produced by the appellant. It is contended by Mr. Mehta, the learned counsel for the assessee, that the certificate of the bank which the assessee sought to produce, was a vital, important and clinching piece of evidence and it was necessary and proper in the interest of justice that the Tribunal should have allowed the same to be produced. Mr. Mehta has argued that the decision of the departmental authorities and the Tribunal that the amount of Rs. 95,483 is the income of the assessee and not of the Aden party is mainly based on the absence of satisfactory evidence to show that the money has been actually remitted from Aden to Bombay. The Income-tax Officer and the Appellate Assistant Commissioner have held that in view of the exchange regulations it was knot possible for the Aden party to permit amounts in excess of the price of the goods received by them and consequently the case of the assessee that this is the amount remitted by the Aden party cannot be true. Mr. Mehta says that, if it is satisfactorily shown that this amount has actually come through the bank from Aden to Bombay, it would normally be the money of the Aden party and not of the assessee unless the Income-tax Officer is in position to show that, although this purports to be the money of the Aden party remitted from Aden to Bombay, it is still the money of the assessee, which he has managed to send to Aden in the first place and thereafter get it back from there through an apparently legal process. At any rate, says Mr. Mehta that once the assessee is able to establish that this is the amount received from the Aden party and credited in the account of the Aden party, which is not a bogus account, the onus will be on the Income-tax Officer to show that it is income of the assessee and not of the Aden party. Mr. Mehta has, therefore, argued that the certificate of the bank was almost a clinching piece of evidence which the assessee was seeking to produce and even though he might be at fault in not having produced it at an earlier stage, he should not have been disallowed to produce the same at the stage of the appeal before the Tribunal.

4. Now, the power of the Tribunal to admit additional evidence in appeal is governed by rule 29 of the rules and orders relating to the Appellate Tribunal. That rule is similar in terms to Order 41, rule 27, of the Code of Civil Procedure. Now, it is well settled that the admissibility of additional evidence in appeal under the provisions of Order 41, rule 27 of the Civil Procedure Code is made to depend not upon the relevancy or materiality to the issue before the court of the evidence sought to be admitted or upon the fact whether or not the applicant had sufficient opportunity of adducing the evidence at an earlier stage, but upon whether or not the appellate court requires the evidence to enable it to pronounce judgment or for any other substantial cause. The admission of additional evidence at the appellate stage is not referable to any right of the party to produce the evidence but is dependent solely on the requirement of the court and it is for the court to decide whether for pronouncing its judgment or for any other substantial cause it is necessary to have the additional evidence before it. The mere fact that the evidence sought to be produced it vital and important does not provide a substantial clause to allow its admission at the appellate stage especially when the evidence was available to the party at the initial stage and had not been produced by him. As has been observed by the Privy Council in Parsotim v. Lal Mohar the rule is not intended to allow a litigant who has been unsuccessful in the lower courts to patch up the weak parts of his case and fill up commission in the court of appeal. Mr. Metha referred to the observations of Ameer Ali J. in the Privy Council case, Indrajit Pratap Bhadur Sahi v. Amar Singh viz, that the jurisdiction of an appellate court under Order 41, rule 27, of the Code of Civil Procedure, 1908, to admit additional evidence is not confined to cases in which the court itself discovers a lacuna or defect and requires evidence to fill up or remedy it. Under the words 'or for any other substantial cause' an appellate court was a discretion to admit further evidence upon the application of a party. It may, however, be pointed out that these observations have been considered and discussed in the later decision of the Privy Council in Parsotim v. Lal Mohar where is has been held :

'By the terms of Order XLI, rule 27(b), it is only where an appellate court ' requires' it (the is, finds it needful) that additional evidence can be admitted. It may be required to enable the court to pronounce judgment, or for any other substantial cause, but it must be the court that requires it. The power cannot be exercised on an application by a party before the appeal is heard.'

5. Referring to the earlier case, Indrajit Pratap Sahi v. Amar Singh their Lordships observed :

'The question in that case was as to the power of the Board to admit additional document which the High Court had rejected, and this power is not in any way restricted or governed by the provisions of the Code. If any incidental remarks appearing in this judgment have occasioned any doubt as to the meaning of the rules above referred to, or the conditions under which the discretion of the appellate court is to be exercised, their Lordships, desire to emphasize their view that the correct practice in the matter is they have defined it in accordance with the plain would of the Code.'

6. It would, therefore, be seen that the admission of the additional evidence in the appeal before the Tribunal is dependent upon the Tribunal having requiring it for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered. In the present case the Tribunal found no difficulty in pronouncing its judgment on the material was on record, nor did it discover any lacuna or defect, which it was necessary to cure, before judgment was pronounced in the case. Where parties to a litigation had proper opportunity to produce all the evidence available to them at the proper stage and have failed to avail of the said opportunity, they could not be enabled to have a further inning by asking the appellate court to allow additional evidence to be produced at that stage. Since in the present case the Tribunal did not find the additional evidence to be necessary, its refusal to allow the said the additional evidence to the produced cannot in any way be said to be illegal or improper and the assessee is not entitled to make any grievance in respect of the same. The first question, therefore, will have to be answered in the negative.

7. Coming now to the other question, which is to whether there was any evidence on record to justify the finding that the sum of Rs. 95,483 forming part of the moneys credited in the account of the non-resident, Maneklal Bhanji of Aden, in the assessee's books of account in the S. Y. 2005 was the assessee's own money representing its income from an undisclosed source, in our opinion, there was evidence on record relevant to the consideration of the said question and consequently the conclusion arrived at by the income-tax authorities and the Tribunal could not be said to have been based on no evidence. It may be pointed out in this connection that the statement of account of the Aden party for the S. Y. 2005 to 2010 which have been supplied by the assessee, show that in all these years the moneys received by the assessee from the Aden party were exactly equal to the price of the goods supplied to them by the assessee. The course of dealings show that for the goods exported in every year, part of the price was remitted from Aden during the course of the year and the balance in the subsequent year. It is only in the S. Y. 2005 that there is, apart from the price of the goods, an additional amount to the extent of Rs. 95,483 received from the Aden party. There is no reason whatsoever why suddenly in one year such sum in excess of the price of the goods supplied by the assessee should have been remitted by the Aden party to the assessee. No satisfactory explanation as to the purpose for which this excess amount had been remitted by the Aden party, has been supplied by the assessee. The explanation which it sought to give were different at different stages. At the very initial stage when the Income-tax Officer, while making the assessment for the assessment year 1955-56, discovered this credit item and asked the assessee to submit an explanation, the explanation give by the assessee was to the effect that these were the amounts, which were sent for the purpose of being lent as sarafi loans and interest was credited in respect of this sum in the interest account. The explanations given by the assessee in the reopened assessment proceedings were varying and conflicting. It was said that the amount may have reference to the price of the goods shipped in earlier years. It was also said that these amounts may be advanced and excess payments made during the course of the dealings. It would thus be seen that the assessee was at a loss to give a satisfactory explanation as to the reason why the moneys should have come from the Aden party to him. The affidavit of the Aden party, which has been produced, stated that it was aware of the account and that the credit balance shown in the said account belongs to it. The said affidavit, however, does not state now and in what manner the credit balance has arisen in its favour nor does it speaks of the amount having been remitted from Aden to Bombay. Although, therefore the assessee has asserted that the amount belongs to the Aden party, it has not produced any satisfactory material in support of the said assertion and in view of the circumstances pointed out above, it is difficult to accept its assertion as true. The entry being in the account books of the assessee itself, cannot advance its case any further. The other circumstances pointed out by the Tribunal and the income-tax authorities are also relevant and significant circumstances. In the beginning of the assessment year, viz., S. Y. 2005 , there was a small credit balance in favour of the Aden party. It may be pointed out that from 1947 onwards there were the exchange regulations between India and Aden and consequently remittances of money from one country to the other were governed by the said exchange regulations. In view of the fact that tat the beginning of the S. Y. 2005, there was a small credit balance in favour of the Aden party, no part of the amount could be said to be attributable towards the price of the goods received earlier by the Aden Party. Whether in spite of exchange regulations it was possible for the Aden party to send freely moneys in excess of the goods exported to it does not appear to be clear. The departmental authorities and the Tribunal have taken the view that in view of the said exchange regulations, it would not have been possible for the Aden party to send money in excess of the goods received by it. There is nothing on record to show that the said view taken by the departmental authorities and the Tribunal was not the correct view and that moneys were capable of being freely sent from Aden to Bombay by anybody who wanted to do so. The credits to the extent of Rs. 95,483 which have been received in the S. Y. 2005 have remained unpaid and no interest has also been charged on the said amount for several years thereafter. These circumstances again are not altogether irrelevant in considering the genuineness of the credits. In our opinion, therefore, there are certain circumstances on record relevant to the consideration of the question in issue and tending to raise an inference that the entry may not be reflecting the real situation and the amount entered in the account of the Aden party may not really be the among belonging to the Aden party, but the concealed income of the assessee. Mr. Mehta has argued that since the account of the Aden party is a genuine account and since the entry appears in that account, it was prima facie sufficient to raise an inference that the amount belongs to the party in the whose account the entry appears and the onus was on the Income-tax Officer to show that the amount really belongs to the assessee and not to the party in whose account it appears. Mr. Mehta in support of his submission has invited our attention to some cases. The first case referred to by him in this connection is Narayandas Kedarnath v. Commissioner of Income-tax. In that case the question was whether certain amount, which were standing to the credit of some of the partners of the assessee-firm, were undisclosed profits of the firm itself. It was found that the amounts had actually been brought by the partners in whose names they were entered, from their native places by means of bank draft. They were, however, unable to explain how these moneys were available to them from their native places to be transferred from there by means of bank drafts. It was because of their inability to explain that the income-tax authorities took the view of that these were really the profits of the firm, which were sought to be shown as the individual moneys of the partners brought from an outside place. In the reference to this courts, it was held :

'The assessee-firm had discharged the burden which was upon it by explaining that the entires represented genuine remittances which had gone into the coffers of the firm. It would be for the department to find that notwithstanding the fact that these moneys were actually brought in, they did not represent the moneys of the partners but they represented the undisclosed profits of the firm which left the firm earlier and returned thought the intermediary of the partners. If the department was not satisfied with the explanation given by the partners then it was legitimate for the department to draw an inference that the amounts represented undisclosed profits of the partners and to assessee them in their own individual assessment.'

8. Now this case, in our opinion, is easily distinguishable from the case before us. There the fact that the moneys had actually been transmitted from an outside place by the partners themselves was established. The question was whether the moneys which were so transmitted were the moneys of the partners of the moneys of the firm brought through the intermediary of the partners. The circumstances that the partners were unable to explain the source of the money was not a circumstances which conclusively showed that the moneys belonged to the firm. The absence of the explanation on the part of the partners could as well be that they were the undisclosed profits of the partners themselves, the sources of which it was not convenient for them to disclose. It was in these circumstances that the court held that it was no possible for the Income-tax Officer to conclude that the profits were the profits of the firm and not of the partners, and that in order to do so he must have sufficient and satisfactory evidence to establish the same. In the case before us, however, the fact that the money has been transmitted from Aden to Bombay by the Aden party is not at all established. If that fact were established then perhaps this case, which was cited by Mr. Mehta, might have given him some assistance. The next case referred to by him is an unreported decision in Income-tax Reference No. 39 of 1955 decided on 28th February, 1956 Begraj Gupta v. Commissioner of Income-tax. The facts of the case were that one B carried on business with his two brothers in the name of Begraj Ramswarup and Co. and also as a proprietor in the name of Begraj Kishandev and Co. There was an account of B's wife in the firms' books of account and there were various cash credits in that account. The explanation of the assessee was that the amounts represented the sale proceeds of gold which had been presented to the wife at the time of the marriage in 1916. The Income-tax Officer rejected the case put forward by the assessee and held that the cash credits represented the assessee's income from an undisclosed source. The Appellate Assistant Commissioner accepted the contention of the assessee with regard to a part of the amount and rejected the contention with regard to the other amounts. When the matter came before the income-tax Appellate Tribunal, the Tribunal agreed with the income-tax authorities that the assessee's case that the amount represented the sale proceeds of the gold ornaments could not be true. It, however, applied a rule of thumb and reduced the amount which had been assessed as the income of the assessee. In the reference before this court, it was argued on behalf of the assessee that the department and the Tribunal were not justified in treating the cash credits as the concealed income of the assessee as there was not evidence in support of the said conclusion. It was argued that the account of the wife was a genuine account and not a benami account. In the account, which admittedly belonged to the wife, the cash credit entires reamed the said cash credits cloud as well belong to three wife in whose names they were entered. Unless the departmental authorities were in a position to show that these cash credits, through appearing in the name of the assessee's wife, did not belong to her but belonged to the assessee, it was not possible for them to treat it as the assessee's income from an undisclosed source. It may be pointed out that in that case it could not be said that it was impossible for the wife to bring her own money, may be from an undisclosed source, into her account. Inasmuch as the possibility of the money being brought in by the wife as matter of fact could not be ruled out, it was held in that case that, it was not possible to come to the conclusion that it represented the assessee's income from an undisclosed source. In the present case, however, the possibility of the Aden party being in a position to remit moneys to Bombay was, according to the department, ruled out by the existence of the exchange regulations. The possibility of the money having been remitted by the Aden party was again reduced unlikely because of the fact that at no subsequent time has any such practice been followed by the Aden party. If the assessee could have shown that it was easy for the Aden party to remit the money or that in fact the amount so credited had actually and factually been remitted by the Aden party, the decision in this case, as in the previous case, would have helped him. In the opinion, therefore, this case cited by Mr. Mehta his also distinguishable on its facts.

9. The third case refereed to by him is Orient Trading Co. Ltd. v. Commissioner of Income-tax. It has been held in the case that if an entry stands not in the name of any person having a close relationship or connection with the assessee, but in the name of the independent party, the burden will still be upon the assessee to establish the identity of the said party and to satisfy the Income-tax Officer that the entry is a real and not a fictitious one. Where, however, in the case where an entry stands in the name of a third party the assessee satisfies the Income-tax Officer as to the identity of the third party and also supplies such other evidence which will show, prima facie, that the entry is not fictitious, the initial burden which lies on him can be said to have been discharged by him. The burden will then shift on to the department to prove why the assessee's case cannot be accepted and why it must be held that the entry though purporting to be in the name of a third party still represents the income of the assessee from a suppressed source. Mr. Mehta argues that in the present case before us the assessee has discharged the initial that burden which lay upon him. He has shown that he entry stands in the account of the third party and he has also established the identity of the third party by producing the affidavit of the party which states that the account and the amount standing in the account belong to it. Mr. Mehta, therefore, has argued that the burden has shifted on to the Income-tax Officer to show that this case of the assessee cannot be accepted and the amount must be taken to be the undisclosed income of the assessee.

10. Now, it is no doubt true that the assessee has shown that the entry appears in the account of a third party and it has also shown that the party to whom the amount belongs is not a fictitious party but a real party but it has, however, not further proved that the entry made in the account is a genuine entry. The mere circumstances that an entry is made does not make it real or genuine. In the present case, having regard to the restrictions on the transfer of money from Aden to India, it was necessary to show that this was remittance received from Aden and the entry has been made in accordance with the said remittance. That fact, as we have already pointed out, his not been established by the assessee. Although, therefore, the account of the third party in the assessee's books of account may be a real account and although the party may may be a real and not a fictitious party, the further fact that the entry is a real entry and no a fictitious entry still remained to be established. We do not, therefore, think that this case also helps Mr. Metha.

11. In the result, therefore, there was, in our opinion, material on record in support of the finding of the Tribunal relating to the sum of Rs. 95,483 and the second question, therefore, must be answered in the affirmative.

12. Mr. Mehta has complained about the observations of the Tribunal that the nature of this income from undisclosed source is business income. According to him, there was not evidence before the Tribunal to come to that conclusion and the said observation, therefore, is clearly unjustified and anwarranted. Now, we may point out that the said observation does not form part of the question which has been referred to us. The question that is referred to us only relates as to whether the conclusion of the Tribunal that the sum of Rs. 95,483 was the income of the assessee from an undisclosed source was correct or not. Mr. Mehta has said that the further observation being consequential upon this finding could be regarded as an aspect of this finding. We may point out, however, that apart from the fact that it does not from an aspect of the question before us, the assessee in his application under section 66(2) to this court has specifically asked for a question with regarded to the said further observation of the Tribunal and the said question has not been granted to him. In our opinion, therefore, it is not necessary to consider the further submission which Mr. Mehta has made before us relating to the consequential observation of the Tribunal relating to the nature of the income.

13. In the result, therefore, we answer both the question in the affirmative. The assessee will pay the costs of the department.

14. There is notice of motion taken out by the assessee praying for the admission on record of certain order made in the penalty proceedings relating to the same amount. These order did not from part o the record before the Tribunal and were as a matter or fact passed subsequently to the decision of the Tribunal in the appeal before it. Mr. Mehta has pointed out that in these penalty proceedings the certificate of the bank had been produced by the assessee before the departmental authorities and it was mainly on the basis of the said certificate that they were satisfied that there was no case for imposing a penalty on the assessee. His objects, therefore, in getting these orders a produced in the present proceedings is to show that the certificate was material and vital evidence as would clinch the issue and establish the assessee's case. In the first place, the orders sought to be produced by the assessee not having formed part of the material before the Tribunal cannot be allowed to be produced at the present stage, and in the second place, since the Tribunal has not allowed the additional evidence of the bank certificate to be produced in the appeal before it and we have upheld the said action of the Tribunal, there is no necessity for allowing the production of these orders passed in the penalty proceedings.

15. The result, therefore, is that the notice of motion is rejected with costs.


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